In or Out of Mortgage Trouble? A Study of Bankrupt Homeowners

INTRODUCTION

For decades, homeowners have populated the bankruptcy system in significant numbers. Today’s prevalent narrative features a delinquent mortgage, and a race against time to enlist the bankruptcy system in the fight to keep the family home. Yet, many bankrupt homeowners do not see themselves reflected in that narrative. In 2007, only about half of bankrupt homeowners identified explicit home- or mortgage-related reasons for filing bankruptcy. The rest told different stories about their paths to bankruptcy court.

This project investigates what makes homeowners more or less likely to have mortgage troubles as they head into bankruptcy. We studied factors that distinguish the non-delinquent from the delinquent, the severely delinquent, and then those who reported foreclosure initiation.4 To our knowledge, this is the first econometric study of these questions among bankruptcy filers. We used the 2007 Consumer Bankruptcy Project (2007 CBP), which is a nationally representative dataset about families who filed for bankruptcy in early 2007.5 Our paper is the first to incorporate substantial information from a homeowner subsample who answered in-depth questions over the telephone about their mortgages, their relationships with their loan servicers, and other issues surrounding homeownership. We also incorporated statelevel information on foreclosure laws and comparative information about American homeowners from the American Housing Survey.

Full paper below…

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4closureFraud.org

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In or Out of Mortgage Trouble? A Study of Bankrupt Homeowners